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Collections and Dunning
For many
telecoms, making sure that the revenue
is accounted for is the end of the
responsibilities for revenue assurance. For others the credit and
collection are
a critical part of the process. It is in the credit and collections
area that many of the revenue
recognition problems can be averted. 
In this area, there are many
different specialized techniques involving the use of data
warehouses, data mining, statistical analysis and operational
disciplines that can greatly increase your returns in this area.
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After invoices
are sent, we refer to all operations having to do with the
collection and tracking of payments from customers that are on time
and the making of adjustments to bills and accounts that occur
within the time frame within which payment is due as “collections
activity.” 
In most
organizations the entire process of credit risk management is
coupled with that of collections. Making sure that the proper credit
policies are in place, tracking how effectively the credit policies
are working and adjusting them as required.
For all of those
cases where the customer does not pay on time, and the handling
of subsequent collections and adjustment activity, we refer to
Dunning.
Processes
The core
processes that drive the Collections process include:
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· Collections
Tracking- Simply
stated, collections tracking is the process of making sure that
all invoices that go out are collected and that those that are
not collected are forwarded to Dunning for late collection. |
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· Collections Accounting-
This is the
process of making sure that all collected funds are applied to
the appropriate accounts in the general ledger and that all
accounting reporting about these revenues is conducted.
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· Billing Adjustments Management-
This is the
process of setting the policies and assuring that the billing
adjustments processes are conducted corrected. In general,
customers will call the call center to request billing and
account adjustments, and then someone (either a call center rep
or a collections group analyst) will hear the case, make a
decision and then apply the credit. |
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· Invoicing Error Investigation
and Resolution- A subset of
the entire billing adjustment process is the invoicing error
handling process. In those cases where a pattern of invoicing
errors are detected, it will be the job of the collections team
to spot the error and then follow through on the investigation
necessary to resolve it as soon as possible. |
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·  Credit Management- The process of assessing the
credit risk that different types
of customers represent, creating
policies and procedures that reflect the appropriate handling
of those risks (deposits, different rate plans, prepaid/ vs.
postpaid or refusal of
service), monitoring the execution of those policies, measuring
the effectiveness of the policies and adjusting those policies
based upon feedback received.
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For purposes of Telco revenue
assurance we use the term dunning to refer to all of those processes
having to do with the activities associated with collecting funds
from customers who have not paid on or near the invoice due date.
Another name for Dunning would be “Collection of Overdue
Receivables” or “Late Payment Management.”
Included in Dunning are:
-Accounts receivable aging
-Post invoice period account
adjustments
Processes
The core processes that drive the
Dunning process include:
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Collections
Aging Tracking- This is the
process of keeping track of the customer invoices that have not
been paid within the specified payment period. Collections aging
deals with “age buckets” of invoices (i.e. invoices that are 0-30
days overdue, 30-60 days overdue etc.). |
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· Dunning
Treatment Queue Management-
Dunning
itself is the process of investing the efforts of the telco
(investing time, systems, phone calls, letters etc.) in trying
to get customers to pay the money that they owe. Managing
Dunning activities can be handled in simple straightforward
manner (one telco has a policy that whenever a customer is 10
days overdue, you call them once a day until they pay), or in a
more sophisticated way (another telco has a sophisticated
scoring and management mechanism that ranks the credit risk each
overdue account represents and chooses different treatments for
different customers based upon the probability that they will
pay). |
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· Post
invoice period adjustments- The problems
with tracking account adjustments
that occur with accounts that are overdue are basically the same
process of keeping track
of account adjustments during the collections phase. The only
difference is that these adjustments might tend to be larger,
and could involve larger sums of money and have more
consequences for overall profitability. Clearly, an additional
set of policies, procedures and compliance mechanisms will need
to be developed in support of this special class of adjustments
as an adjunct to the normal processes. |
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· Dunning
accounting-
Application of late funds collected to the general ledger
and other accounting reports
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Revenue Assurance Library
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